E-Discovery: Cutting costs with predictive coding

The cost of e-discovery is forcing good companies to settle bad cases—but not for long. If your litigation budget had ears, “predictive coding” would be music to them.

How it works

Predictive coding is a “technology-assisted classifying process” in which “a human reviewer codes documents the computer identifies (as responsive)—a tiny fraction of the entire collection. Then, using the results of the human review, the computer codes the remaining documents in the collection for responsiveness.” There are four phases to the predictive-coding process:

Phase 1: A senior lawyer chooses the responsive electronic documents based on his or her review of a sample of the electronic documents

Phase 2: Phase 1 is repeated with senior lawyers until the computer is sufficiently “trained” to apply their conclusions across a wide set of documents (or the whole document set)

Phase 3: The predictive coding software is deployed against the entire document set and will distinguish between relevant and non-relevant documents, or prioritize the documents on a scale of one to 100 (depending on the software you select)

Phase 4: The documents that are machine-coded as responsive are subjected to a final human quality review and produced to the opponent

How it saves your company money

Using predictive coding software replaces the once overcrowded rooms of contract attorneys who pored over millions of records and billed by the hour. Rather than hiring 15 $80-per-hour reviewers working 40 hours per week for three weeks for a total review cost of $144,000, your company could conduct the same review with three senior lawyers at $600 per hour for eight hours at a total labor cost of $9,600, saving $134,400 without the cost of using the software. Furthermore, the empirical data on predictive coding confirms “the levels of performance achieved by ... technology-assisted processes exceed those that would have been achieved by ... the law students and lawyers employed by professional document-review companies—had they conducted a manual review of the entire document collection.”

So, why isn’t anyone using predictive coding yet?

No one wants to be the guinea pig. To date, no court has evaluated (or endorsed) the use of predictive coding.

However, a forceful judicial “endorsement” has been asserted by Andrew Peck, U.S. Magistrate Judge for the Southern District of New York:

I know what you’re waiting for: You think one day a judge will deliver an opinion or a judgment which says in terms that a particular kind of technology is approved by the court. ... Perhaps you have a mental picture of the occasion: “It is the opinion of this court that the use of predictive coding is a proper and acceptable means of conducting searches under the Federal Rules of Civil Procedure. ...” Perhaps the judge will go on to praise the car which he or she drove to work, offer an endorsement of the floor polish used in the court, and give a quick puff, as it were, for his own favorite brand of cigarette. IT’S NOT GOING TO HAPPEN!

Take advantage of predictive coding now

Given that both counsel and clients risk hefty sanctions (including default or dismissal) if the predictive coding software fails to “predict” the relevance of an important document, it is wise to be cautious. Litigators, however, can and should take advantage of the cost-saving benefits of predictive coding now by involving the court and the opponent in the predictive-coding process.

1. Learn about predictive coding technology and select a vendor;

2. Seek the opponent’s agreement to use the technology after fully disclosing the risks (in writing);

3. If the opponent agrees, identify to the opponent the documents you have identified as relevant that will guide the software;

4. If the opposition does not agree, run a demonstration on a sample set to prove to the opposition the validity of the software and method;

5. If the opposition still does not agree, move the court to compel your opponent to pay for the cost of a manual review.

Predictive coding is far too enticing a cost-saving mechanism to remain in the shadows for very long. Use the above approach to introduce predictive coding into your cases, and your outside counsel will be able to get back to spending your litigation budget to win bad cases instead of settling them.